Ergen: EchoStar may raise rates - Broadcasting & Cable

Ergen: EchoStar may raise rates

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EchoStar Chairman Charlie Ergen said his DBS service was underpriced and he
would have to raise rates if it were not allowed to merge with Hughes'
DirecTV.

Prefacing many of his remarks with 'without a merger,' Ergen said in a
conference call to discuss earnings that rates will rise more steeply than in
the past.

Cable prices will rise under a combined Comcast AT&T, he said, so a
stand-alone EchoStar, unable to go after all customers in the U.S., will have to
raise prices, too. 'It won't be bad for us,' he said, 'just for consumers.'

Ergen said not to look for another 'three free months' promotion and
attributed much of the third-quarter churn to customers' bailing after the
promotion expired.

The rest he attributed to piracy and to cable's advantage of offering modem
service.

Ergen said he will continue the 'uphill fight' for a merger with DirecTV.

When pressed by one analyst on the downside of a failed merger, he wouldn't
speculate on the effect on the stock price of the range of possibilities,
including having to pay $2.7 billion for DirecTV parent Hughes' 81% stake in
PanAmSat and/or a $600 million break-up fee.

He called the third quarter mixed, citing slightly higher than expected churn
and subscriber-acquisition costs and lower than expected EBITDA of $197.4
million.

On the positive side, sub growth was higher than expected at 320,000 vs. a
projected 306,000.

That's more than 50% more subs than DirecTV added in the quarter, according
to Banc of America Securities.

Total revenue for the quarter was up 19.6%, to $1.2
billion.

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